SAN JOSE, Calif. – Using charisma, serenity, and a little bit of scientific jargon, Elizabeth Holmes convinced investors to give her nearly $ 1 billion to build Theranos, her blood testing startup. That all collapsed in 2018 after it was discovered that the company’s technology and business relationships were struggling.

On Tuesday, Ms. Holmes used the same techniques to convince a jury that she was not guilty of fraud.

Ms. Holmes took a stand on her own defense on a third day and provided her main arguments to refute the eleven cases of fraud that the prosecutor has charged with her. She made eye contact with the jury and tilted her head to one side while claiming that she could not have deliberately misled anyone about Theranos’ technology.

Ms. Holmes, 37, took turns providing authoritative descriptions of Theranos’ scientific research, presenting herself as a naive and ambitious founder who believed her company’s technology worked. She tried to reinterpret past incidents as a misunderstanding of her intentions. She indicated that her board of directors should have advised her better. She suggested that she trusted the doctors, scientists, and engineers who worked in Theranos too much.

And she portrayed herself as an entrepreneur who cared very – maybe too much – about protecting the brand and financial future of her company to the point of making decisions that were later impaled as fraudulent by prosecutors.

The purpose of the defense was to cast doubts on the prosecutor’s case throughout the day of testimony: that Ms. Holmes had deliberately claimed that Theranos could revolutionize healthcare, even though she knew the start-up’s technology was lacking. White collar crime proceedings are often very technical and complex, and prosecutors have the burden of proving that the defendant was fraudulent.

“The whole ball game is knowledge and intent, and that’s the hardest part for prosecutors to prove,” said Andrey Spektor, attorney with Bryan Cave Leighton Paisner and former federal attorney in New York’s Eastern District.

The government’s best evidence of Ms. Holmes’s intent is evidence obtained from documents and testimony of others, Spektor said. But Mrs. Holmes could say directly what she knew and intended, he said.

The high-profile process is seen as a cautionary example for start-ups from Silicon Valley, which often have the same kind of hectic pace, ambition and idealism for changing the world that catapulted Ms. Holmes into the highest ranks in the industry. Despite the tech industry’s reliance on the hype, few executives have been charged with lying to investors, making Theranos an outlier.

But while tech startups continue to raise record-breaking sums of cash, some standard governance and diligence practices have fallen out of the window, investors and entrepreneurs said. If Mrs. Holmes is convicted and sent to jail, the verdict could tarnish the good times and instill a new sense of caution in freewheeling founders.

On Tuesday, Ms. Holmes started a busy day of testifying at 9 a.m. and stayed on the stand all day. She repeatedly pounded on a main defense theme: that she believed Theranos’ technology worked. The jurors were shown emails from various scientists and doctors working in the company’s laboratory describing successful studies, trials, and other breakthroughs.

Channing Robertson, a Stanford University professor who joined Theranos’ board of directors, told her that her ideas were “very promising,” Ms. Holmes said. An email about Theranos’ tests to Ms. Holmes from Ian Gibbons, Theranos Chief Scientist, said, “Our immunoassays are the best that can be done in clinical laboratories.”

In a concession to one of the prosecution’s largest pieces of evidence, Ms. Holmes admitted that she had personally added pharmaceutical company logos to Theranos’ validation reports without her permission. These reports documented studies of Theranos’ blood tests conducted in partnership with pharmaceutical companies and had helped convince investors and partners that the start-up was real business.

Representatives from drug manufacturers Pfizer and Schering-Plow said at the start of the study that their companies neither wrote nor approved the reports. But Ms. Holmes sent the reports with her logos as part of her pitch to investors and partners to get them to invest in and do business with Theranos.


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Ms. Holmes said Tuesday that she only added the logos to the reports to show that the work described was being done in collaboration with the drug companies. She said she has no intention of misleading investors.

“I heard that statement in this case and I wish I had done it differently,” she said.

In response to testimony from lab workers who said they quit out of frustration with Theranos’ shabby science, Ms. Holmes said she never forced anyone to sign anything they disagreed with. She added that she did not allow Theranos to run tests that were not approved by the lab director, adding that she was not qualified to approve the tests herself.

It also denied one of the prosecutor’s biggest allegations: Theranos secretly performed most of his blood tests on off-the-shelf devices from companies like Siemens, not his own. Theranos had advertised its small blood analyzers, known as Edisons and MiniLabs, for doing hundreds of different tests on a drop of blood. But in reality it could only run a dozen tests and had modified Siemens machines to run tests on smaller amounts of blood.

Ms. Holmes said she never told investors, partners, the public, or her own board members that the company was doing most of its testing on Siemens equipment because Theranos had made modifications to those machines. She said she was afraid that Siemens or other competitors would copy these changes.

“This was an invention that we understood from our lawyer that we had to protect as a trade secret,” she said.

Ms. Holmes did not delve into her relationship with Ramesh Balwani, her boyfriend of more than a decade who was Theranos’ chief operating officer. The two were charged together, but their cases were split up last year. Mr. Balwani, who is called “Sunny”, will be tried next year. Neither of them pleaded guilty.

The couple kept their relationship a secret, but Ms. Holmes’ attorneys said on file that they expected her to tell the jury that Mr Balwani, who is 18 years older than Ms. Holmes, abused them emotionally and physically during their relationship . They also said they expect to call Mindy Mechanic, an expert focused on abusive relationships, to clarify Ms. Holmes’ allegations.

Mr Balwani’s role in the alleged fraud was discussed almost every day of the trial, but in Mrs Holmes’s testimony he was only mentioned when it was necessary, for example to describe an email thread used as evidence.

At the beginning of the trial, Judge Edward Davila of the U.S. District Court for the Northern District of California, who oversees the case, instructed the jury not to speculate about Mr. Balwani’s absence.

At the end of the trial on Tuesday, he warned jurors not to discuss the process with the family over Thanksgiving weekend. “Do your best to pass the mashed potatoes and not talk to anyone,” he said.

Mrs Holmes’ testimony will continue next week.

Erin Woo contributed to the coverage.


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